Facebook Plops Ads in News Feeds, Wants to Know Where You Go Outside of Network

Facebook is clearly firing on all cylinders to earn more advertising revenue and get you to click on those ads. And it’s willing, even eager, to bust past the limits of its own social network to make that happen.

The company followed up last summer’s Facebook Exchange policy, which enabled advertisers to place “retargeted” ads on the right side of user pages. (“Retargeted” refers to ads delivered to users based on sites they’ve visited before.) The new update allows sponsored ads to be placed into users’ primary “News Feeds.” But here’s the kicker: Clicking on them doesn’t necessarily send you to the company’s Facebook page, in-network event or promotion. Advertisers have Facebook’s blessing to direct people out of the network and over to its own website. Why? Because what happens after that is of particular interest to the social giant.

Facebook already knows what you do and how you share inside its network. Now, if it can know where else you go and what you do out there, it will give them some bold new advertising superpowers.

Last year, Facebook offered an interesting test for potential advertisers: Give us the e-mail addresses of your customers, and we’ll cross-reference that against our userbase and show these people your targeted ads. Online-only menswear retailer JackThreads gave this a go recently. When it ponied up two million customer e-mails, it found that more than two-thirds had Facebook accounts. (Of course, it helps that many members sign into the site using Facebook credentials.) The social network then delivered advertisements for specific products they had perused at JackThreads.com. The tactic worked: The retailer’s sales jumped 26 percent.

The Wall Street Journal‘s AllThingsD explains: “Instead of telling an advertiser that they’re likely to find someone receptive to their message based on their Facebook behavior, Facebook is telling an advertiser they can guarantee delivery of their message to someone who has visited certain websites.” But it’s not just website visits, says The New York Times. Late last month, the company unveiled four new partnerships that can collect a vast array of behavioral data — from store loyalty cards and customer e-mail lists, to divorce records and Web browsing histories.

Acxiom pulls all sort of data from financial services companies, court records and federal government documents.

Datalogix has a handle on the spending habits of more than 100 million Americans across categories from cough medicine to fine jewelry and college tuition.

Epsilon is keyed into transaction data from retailers across the country.

It’s worth noting that Acxiom and Datalogix, along with seven other companies, are being investigated by the Federal Trade Commission to find out how these businesses acquire and use consumer data. This is the part where Facebook chimes in to make it perfectly clear that no personally identifying information is shared with advertisers. It doesn’t hand over e-mail addresses and Facebook usernames, but encrypts and matches them itself. Plus, if users don’t like this approach, they can opt out of targeted messaging.

But Facebook is optimistic about that users will see the benefits of targeted advertising. “[Users] get to see better, more relevant ads from brands and businesses they care about and that they have a prior relationship with,” says Gokul Rajaram, Facebook’s product director for ads. And, he adds, “there is no information on users that’s being shared that they haven’t shared already.” That’s true. And in reality, Facebook’s not the only one

So what would that look like to end users? Something like this: One day you buy yogurt using your supermarket savings card, then return to your Facebook page to see yogurt promotions plastered in your Facebook News Feed. Bought diet cola? Expect to see ads for weight loss. Booked a hotel online for work? Rental cars in that city could suddenly pop into your page. Going through foreclosure or divorce? Say hello to “credit repair” services or possibly attorney resources. And the list goes on and on.

Some users may delight in trading in generic, irrelevant ads for promotions they might actually be interested in. Others, however, may be ill at ease with the tracking, data cross-referencing and monitoring that makes these ads possible. Facebook thinks most users will fall in the former category, but only time will tell.

What do you think? Will people like this approach to retargeted ads and find them useful? Or will the tactic estrange users instead?

Adriana Lee

Adriana is the resident writer-slash-culture vulture who has written about everything from smartphones, tablets, apps, accessories, and small biz technology to cooking, fashion, pop culture, newsmakers and the arts. She…